Fruitful dialogue promoting a win-win partnership of Algeria and the EU

During various visits to both Algiers and Brussels, wishes for a fruitful dialogue promoting a win-win partnership of Algeria and the EU as well as a common determination to enhance relations to the heights of the existing Agreement’s proclaimed ambitions were reaffirmed.

The picture above (Copyright The Financial Times Limited 2018. All rights reserved.) is of Algeria: A giant afraid of its shadow, depicting the country as a regional powerhouse, having been reluctant to flex its muscle despite the turmoil surrounding it in an article of the FT by Borzou Daragahi posted on APRIL 3, 2013.

Algeria is an actor of stability in the Mediterranean and North African region and as a strategic player for Europe’s energy supply through notably the Medgaz and Transmed pipelines.

The intention would be to “densify” this cooperation, as per the Algerian Foreign Minister, for whom “the evaluation process requested by the Algerians does not aim at calling into question the Agreement but, on the contrary, to use it fully in the sense of a positive interpretation of its provisions allowing for a rebalancing of the links of cooperation. According to the European side, the bilateral relationship, which is promising both in the field of energy and in business and trade, has unexplored potential, even if encumbered by persistent administrative burdens and unpredictable political decisions. The European side must look at Algeria as a partner and not only like a huge market for receiving all “Made In Europe” products as Algeria must understand that in this 21st Century, network relationships have replaced personalized relations between heads of States or Ministers through credible networks.

Settling the different Algeria/Europe: for shared prosperity

Before the French National Assembly, the European Trade Commissioner, Cecilia Malmström, had stated, on Tuesday, April 10th, that the restrictions on imports introduced by Algeria were “not in conformity with the free trade agreements” contained in the Association Agreement between the Union EUropean (EU) and Algeria and that in case of failure of the dialogue between the two parties on this subject, “The dispute settlement clauses” of this agreement will have to be mentioned. However, according to the Algerian Government on the period 2005-2015, Algeria’s non-hydrocarbon exports to the EU stood at $14 billion, while Algeria imported $220 billion from the EU. In terms of customs revenue, the Algerian government estimated in 2015 the loss of profits as caused on the same period, at more than €6.7 billion (at the rate of 2015). For the Europeans, it is up to Algeria to recognize that it is its total exports to Europe that should and not just non-hydrocarbon products therefore to move towards reforms of the investment legislation, particularly regarding all SME-SMEs in all sectors of activity.

I’ve been recipient thanks to friends in Brussels, at the end of December 2016 of the new mount of the partial revision proposed by the EU following the Algerian proposals of the Association Agreement that comforts some Algerian proposals but is not in any way concerned with amending the main Agreement framework. This confirms the recent declaration of a Ministry of Foreign Affairs official for whom the document containing 21 recommendations would enable the cooperation between Algeria and the EU to be revived in order to put economic relations at the centre of this cooperation, to give this agreement all its importance and To use all its enormous potential in its three Components: Political, economic and human.

As recalled in my contributions and taking up some ideas at my conference at the invitation of the European Parliament, after a real concern of the international community where some Algerian media have speculated on the breakdown of the agreement which links Algeria to the Union EU, the Algerian officials were clear. For Algeria, there is no question of breaking the Association agreement. The situation in the country remains, however, dependent on developments in the oil markets, the sales of which the country derives the bulk of its income. It is in this capacity that the Council of Ministers of 06 October 2015 considered it necessary to re-evaluate the economic and commercial aspects of the Association Agreement with the European Union (EU) which did not achieve the expected objectives for European investment in Algeria. The Agreement’s Article 32 stipulates for any commercial presence that Algeria should reserve to the establishment of any EU’s companies in its territory, a treatment that is no less favourable than that granted to third-party country companies all in accordance with its legislation and that no less favourable treatment with regard to their exploitation than that granted to its own companies or branches or to Algerian subsidiaries or branches of other third-party country companies should be considered.

The general provisions of article 37 stipulate that the parties avoid taking action or engaging in actions that make the conditions for the establishment and operation of their companies more restrictive than they were on the day before the signature of this Agreement.

With regards to article 39, it is the EU and Algeria that shall ensure, from the entry into force of this agreement, the free movement of capital relating to direct investments in Algeria, carried out in companies established under the Legislation in force as well as the liquidation and repatriation of the proceeds of these investments and any profit therefrom.

Lastly, article 54 for the promotion and protection of investments, it is stipulated that cooperation aims to create a climate conducive to investment flows and is carried out in particular through the establishment of harmonised and simplified procedures for mechanisms of co-Investment (especially between small and medium-sized enterprises) as well as identification and information of systems on investment opportunities, conducive to investment flows, the establishment of a legal framework promoting investment, the conclusion between Algeria and the Member States, investment protection agreements and agreements designed to avoid double taxation and technical assistance in promoting and guaranteeing actions domestic and foreign investments.